Tencent released Hunyuan, an AI model for businesses during the China Competition

Chinese tech giant Tencent is launching its artificial intelligence model “Hunyuan” for commercial use at its annual summit on Thursday, Dawson Tong, CEO of the Cloud and Smart Industries Group at Tencent, told CNBC in an exclusive interview ahead of the event.

The news comes after Baidu unveiled several AI-powered applications on Tuesday amid more supportive regulation.

Tencent said it is internally testing its Hunyuan AI model on advertising and fintech. The gaming and social media giant will release an AI chatbot on Thursday, the company said in an online post.

Tencent is integrating Hunyuan’s capabilities with its existing products for video conferencing and social media, Tong told CNBC.

The company operates WeChat, a messaging and payment app widely used in China, and Tencent Meeting, a video conference platform.

Baidu and several other Chinese companies have received the green light to release AI-powered chatbots to the public in the past few weeks.

Similar to ChatGPT, the bots respond to questions in a human-like, conversational manner – but primarily in Chinese. Some, like Baidu’s Ernie bot, convert text into images and videos with the help of plugins.

OpenAI’s ChatGPT is not officially available in China. The chatbot release follows new Chinese regulation on generative AI that took effect on August 15.

Asked about the regulations, Tong pointed out that such artificial intelligence is so new that no one knows what impact it will have on society.

“It’s wise to put some railings in place,” he said. It will help ensure that the technology or services being offered are of high enough quality so that they do not create and distribute false information, he said.

Chinese officials said the “interim” rules that came into effect last month would not apply to companies developing AI tech until the product is widely available to the public.

It is more relaxed than the draft released in April which said the upcoming rules would also apply to the research stage.

While Beijing has shown it is more supportive of generative AI than initially feared, Chinese companies also face US sanctions to acquire advanced semiconductors. The most sophisticated versions of high-tech chips, known as graphics processing units (GPUs), allow companies to train AI models.

“The obstacles we’re facing will hinder the pace of progress, development,” Tong told CNBC in response to a question about the US sanctions.

He noted that the overall demand for computing power is far greater than the supply in China. To mitigate the shortfall, he said companies are “focusing on specific use cases, creating right-sized models.”

“And we hope that the supply of GPU compute will become larger in the coming months, and therefore the development of this technology can accelerate.”

Tencent is one of several companies in China — from startups to phone maker Huawei — that have rushed to announce AI products this year. In August, Alibaba announced that it was opening up its own AI model to third-party developers.

Tencent’s Tong said artificial intelligence requires industry-specific training to create value for the technology. They listed business use cases in tourism, finance, public services, and customer service.

“We believe that many different customers will, in fact, benefit more by leveraging open-source models and using their own enterprise data to train their own models to meet the specific needs of their industrial use cases,” he said.

That designated use can also help protect data, he said.